Template-Type: ReDIF-Paper 1.0
Title: Monotone Decision Rules and Supermodularity
Author-Name: Gregorio Curello
Author-Email: gcurello@uni-bonn.de

Classification-JEL: C61, D71, D81
Keywords: monotone comparative statics, rearrangement, optimal taxation, price
discrimination, uncertainty, informativeness

Abstract: We study decision problems under uncertainty involving the choice of a rule
mapping states into actions. We show that for any rule, there exists an increasing
rule generating higher expected value for all payoff functions that are supermodular
in action and state. We present applications to problems of taxation, betting, and
price-discrimination in markets with demand externalities. We then consider rules
mapping noisy signals of the state into actions. Under some conditions, optimal
rules are increasing when (a) several agents are constrained to choose a single rule
or (b) the relationship between signal and state is ambiguous. Moreover, standard
informativeness criteria apply.

Note: 
Length: 28
Creation-Date: 2024-06
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp567
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2024_567